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How to manage the cost of apprenticeships

National Apprenticeship Week has put the spotlight on the government’s Apprenticeship Levy and what the radical overhaul of apprenticeship policy means for small business finances.

From April 2017, the government wants to introduce a 0.5% tax on companies with a wage bill of over £3 million in order to fund apprenticeships. It is envisaged that the Levy will raise £3 billion a year that will finance three million apprenticeships. Unsurprisingly, the proposal has caused some ripples in the business sector. For all the benefits of a strong apprenticeship scheme, the bottom line is that a significant number of already under-pressure small business owners are facing a tax increase.

According to the Centre for Economics and Business Research, apprenticeships could generate an £18 billion increase in revenue for businesses in the UK. Companies would benefit from position-focused training that helps reduce skill shortages, meets production needs and reduces staff retention costs. However, at the same time, you can forgive business owners for considering the move as yet another demand in a long line of costs that are undermining their ability to grow. SMEs are already facing costs relating to pension auto enrolment, cybersecurity, super-fast broadband and late payments in 2016. It is telling that amid the praise for apprenticeships, there has been a call for simplification of the process on the grounds of affordability.

So, how can SMEs manage the cost of apprenticeships? Putting proper strategy to one side and getting down to the financial bare bones, any scheme needs to be part of a solid development plan based on a concrete fiscal platform. And in its today’s climate, this fiscal platform has to include engagement with alternative finance and services such as invoice finance, peer-to-peer lending and crowdfunding, whether in a stand-alone capacity or in combination with traditional lending. For small businesses to flourish in such conditions, their financial services must provide flexibility, transparency and reliability, and alternative finance ticks every box.

To find out more about A&T Business Associates services, contact us on 01903 602211 or info@atbusinessassociates.co.uk.

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